Tyson Foods said today it may close its beef slaughter plant at Denison, which would cost 400 jobs, as part of an upgrade of its flagship boxed beef plant at Dakota City, Neb.

The Denison plant was built in 1961 and was the original facility of the old Iowa Beef Processors Inc., which later pioneered the concept of boxed beef at the newer Dakota City plant.

The Denison plant is slaughter-only and is considered a satellite of the Dakota City plant. Tyson said: “A majority of the cattle currently handled by the Denison plant are purchased from independent cattle operations that are actually located closer to Dakota City.”

“It’s difficult to consider the possibility of closing our Denison plant, given the impact on our people, the plant’s long history in the meat industry and the tremendous support we’ve received from the community over the years,” said Tyson vice president Noel White.

“However, unless area cattle supplies increase significantly or we find an alternative use for the facility, it may make economic sense to discontinue operations there next year.”

Tyson said the Dakota City project, which is already under way, is scheduled to be completed in mid-2013. It includes construction of a new beef slaughter floor that will incorporate the latest sanitation and production systems.

The company is also making improvements to the Dakota City plant’s beef carcass cooler, rendering and box handling operations, as well as employee lockers and cafeteria. Changes in the plant’s box handling system will involve the installation of additional conveyors and other equipment that will enable the facility to more efficiently handle the product mix.

“Dakota City is our flagship plant and this investment means we expect it to continue to be one of our top performers and an important market outlet for the region’s cattle producers,” said Noel White, senior group vice president of Tyson Fresh Meats. “The improvements will help optimize the value of the plant’s product mix for domestic and international customers and make the plant even more cost competitive.”

Tyson said “the Dakota City plant will no longer need a supplemental supply of beef carcasses from the company’s satellite beef plant in Denison. This means the Denison facility, which employs approximately 400 people, may close sometime in 2013.

The closing would reflect a longstanding trend in Iowa, which has seen its position as the nation’s largest cattle feeding state a half-century ago diminished as more cattle have been fed in massive new feedlots in Texas, Oklahoma and western Kansas.

That massive shift has caused Iowa’s total cattle population to drop from 7.5 million head in 1965 to 3.8 million in 2010, the last year full statistics are available.

USDA statistics show a drop in the number of Iowa cattle producers from 125,000 in 1965 to fewer than 30,000 after 2007.

In 1965 Iowa had the nation’s second-largest inventory of cattle, trailing only Texas’ 10.2 million and ahead of Nebraska’s 6.1 million.

By 2011, Texas had increased its herd to 13.3 million and Nebraska maintained its 6 million animal level while Iowa’s cattle herd fell to 3.8 million.

Tyson and other meatpackers have built huge new facilities in places like Amarillo, Tx., and Emporia, Kan., to accommodate the shift.

“Over the years it became cheaper to ship the corn to feed cattle in the big new lots in the southwest than to ship cattle up here to feed,” said Jim Schaben jr., whose family has operated a cattle auction at Dunlop, 16 miles from Denison, since 1950.

Schaben said “the last thing Iowa needs now is to lose another slaughter facility.”

In the last two decades Iowa has seen the closings of slaughterhouses at Tama and the Montfort plant in Des Moines. The kosher kill facility at Postville in northern Iowa was closed in 2008 after an immigration raid, but has reopened.

Schaben said the growing profitability of producing corn, which has tripled in price since the middle of the last decade, has caused more smaller Iowa cattle feeders to abandon the business. Of Iowa’s 92,000 farm operations, about 20,000 are listed as cattle producers according to the most recent census of agriculture by the U.S. Department of Agriculture.

“A half-century ago, when the Denison plant was opened, the vast majority of Iowa farmers also raised cattle,” said Schaben. The number of Iowa farm operations has dropped from about 150,000 in the late 1950s to 92,000 today.

The cattle industry has contracted nationwide, with the U.S. herd now at its smallest level since 1952, according to the USDA. The contraction was caused primarily by the flat trend in domestic beef consumption. However, a 30 percent increase in U.S. beef exports has caused a tightening of supplies.

Prices for slaughter-ready and younger feeder cattle have reached record levels this year and the finished box beef prices are up 15-20 percent over a year ago as slaughterhouses and processors scramble for animals.

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